Chevron Corporation (CVX - Free Report), one of the world’s leading oil companies, is set to report first-quarter results on Friday, Apr 26, and as always, market participants are anxiously anticipating the release. 

The stock has been steadily going up this year, notching up a decent gain, as the San Ramon, CA-based integrated player has benefited from strength in the Energy space. That said, let's see if it's time to buy Chevron’s stock, which has now climbed around 7.3% year to date to easily top the S&P 500.

Image Source: Zacks Investment Research
 

Higher Energy Prices Fuel the Ascent

Obviously, the recent rise in oil prices has played a key role in CVX’s gain. That's a big boon for the company, given that it drives revenues and cash flows at its key upstream unit.

Oil prices rallied in the first quarter of 2024, with both Brent and West Texas Intermediate (“WTI”) crude futures registering significant increases. Brent oil, the global benchmark, rose nearly 14%, while WTI, which tracks U.S. crude, surged approximately 16% during the quarter. As of yesterday, the global benchmark settled at $89.89 per barrel, while U.S. crude closed at $85.06 a barrel.

Several factors contributed to the uptrend in oil prices, including the ongoing production cut by major oil-producing nations and geopolitical tensions.
 

Q1 Preview

Chevron has exceeded the earnings mark in three of the past four quarters. Given the company’s positive track record, the question is, can it maintain the momentum? 
 

Chevron Corporation Price and EPS Surprise

Chevron Corporation price-eps-surprise | Chevron Corporation Quote

The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of beating estimates. But that’s not the case here. CVX has an Earnings ESP of 0.00%, while it carries a Zacks Rank #3. Moreover, Chevron’s Q1 earnings are expected to slump 20% year over year to $2.84 per share, with sales projected to be down 1.6% to $50 billion.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Make sure to keep an eye on the company’s production, which rose 12.7% in the last quarter and could be up again in Q1, primarily reflecting contribution from the PDC Energy acquisition and robust output in the showpiece Permian Basin region. As a matter of fact, for the to-be-reported quarter, the Zacks Consensus Estimate for total volume is pegged at 3,805 thousand oil-equivalent barrels per day (MBOE/d), indicating a rise from the prior-year quarter’s output of 3,797 MBOE/d.
 

Valuation & Annual Outlook

Chevron shares are somewhat cheap on a relative basis, with the current 11.78X forward price-to-earnings ratio sitting below the 12.65X five-year median. However, it is trading at a premium to the Zacks Oil and Gas International Integrated industry average of 9.77X.   

The company’s annual earnings are now expected to be up 3.4% in 2024 and rise another 15.3% in 2025 to $15.66 per share. Total sales are forecast to improve by 3.2% this year, with revenues likely to go up another 5.6% to $218.9 billion in 2025.
 

Final Words

Chevron, which is set to acquire Hess Corporation for $53 billion, has certainly asserted itself as one of the most important energy companies. Of course, nobody knows what the quarterly report will say, or how the market will react, but this supermajor is undoubtedly a fantastic stock to hold onto.

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